Fannie Mae: Now Free From Debt But Still Under Government's WingWith another $7.2 billion in payments to the Treasury Department, Fannie Mae is now in the black for the first time since it entered conservatorship in 2008. Yet Fannie's future is as murky as ever.

With another $7.2 billion in payments to the Treasury Department, Fannie Mae is now in the black for the first time since it entered conservatorship in 2008. Yet Fannie's future is as murky as ever.

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Fannie Mae will soon pay back the last of the money it borrowed from taxpayers. After five and a half years, the mortgage giant will no longer be in debt to the federal government, which took it over during the financial crisis. Last year was a stellar year for Fannie. But as NPR's Yuki Noguchi reports, its future is still up in the air.

YUKI NOGUCHI, BYLINE: Fannie Mae has been eager to shed its bad reputation as a government freeloader, and it's been trying to advertise this fact.

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UNIDENTIFIED MAN: We have taken actions to improve our financial performance, build a profitable new book of business, and reduce losses on loans that were originated leading up to the crisis.

NOGUCHI: Timothy Mayopoulos is CEO of Fannie Mae. On a conference call this morning, he hailed Fannie's eighth consecutive profitable quarter as a milestone.

TIMOTHY MAYOPOULOS: I'm very proud of what our employees have achieved, and I'm very, very happy for the taxpayers.

NOGUCHI: For the past couple of years, Fannie Mae has been required to deposit all its profits into the U.S. Treasury. And last quarter, a combination of tax benefits, large settlements with banks, and an improving housing market helped.

MAYOPOULOS: Our total dividend payments will be $121.1 billion, which is $5 billion more than the $116.1 billion we received in taxpayers' support.

NOGUCHI: But the company will remain in conservatorship until Congress acts.

KAREN SHAW PETROU: The problem is not solved because they're making money. The money masks the size of the problem, and I do think that's well understood.

NOGUCHI: Karen Shaw Petrou is managing partner for Federal Financial Analytics. She notes the U.S. housing market is heavily dependent on government backing. The government acting through Fannie, its sibling firm Freddie Mac, or the Federal Housing Administration, guarantees well over 90 percent of mortgages. In the past, private money from lenders funded a much a bigger chunk of mortgages. But right now, Petrou says the government is reaping nearly all the gains because it's also bearing all the risks.

PETROU: It's still a very unnatural business model. It's the result of something very weird in the wake of the crisis that still needs to be resolved by Congress.

NOGUCHI: And Congress is indeed entertaining proposals. In addition to existing legislation, Petrou says there could be another bill introduced in the next week or two. All proposals aim to bring private capital back into mortgage finance and wind down Fannie and Freddie. They differ in how much they would preserve the role of government in the mortgage market.

Meanwhile, it's not clear the Treasury Department will get to keep all the money it's received. Fannie's private hedge fund shareholders are suing the government, trying to recover some of the profits the company has paid to Treasury. Yuki Noguchi, NPR News, Washington.

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